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An overview of the Incoterms DDP and DAP

In cross-border e-commerce, the customs clearance Incoterms DDP and DAP are often referred to, but what do they actually mean, and why are they so important for you as an online retailer? We'll give you the lowdown! We’ll also explain why you can sell even more with DDP. Intrigued? Then keep reading!

Incoterms DDP and DAP

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Incoterms is an abbreviation for "International Commercial Terms", i.e. the rules of the game, such as payment and delivery terms in traditional trade. The two most common Incoterms are DDP and DAP.

DAP stands for Delivery at Place. That is to say:

  • For deliveries on the basis of DAP, the seller is responsible for the delivery of the goods including transport costs to the named destination, i.e. the buyer's premises. However, the costs of carrying out all necessary import formalities are explicitly excluded. All duties and taxes in connection with the import in the country of destination must be paid by the buyer or recipient. If an order exceeds a certain value of goods (in Switzerland 62.50 CHF and €22 in most European countries), the order becomes subject to VAT. The consignment is therefore cleared through customs in the country of destination.

DAP Incoterms: Who pays? If VAT and/or customs duties are above the exemption limits, all duties must be paid at the door upon receipt of the shipment. If the recipient is not present at the time of the delivery or the outstanding amount cannot be paid, an advice note will be left to collect the shipment.

However, most shoppers are unaware that they a) ordered from abroad and b) become liable for VAT outside the EU zone. If the Incoterm is not clearly defined when ordering in the online shop, your customers will be rightly annoyed! Of course, this leads to dissatisfied customers and bad ratings for your online shop.

  • The subject of customs clearance is central to every online shop!

 

DDP stands for Delivered Duty Paid. That is to say:

  • For deliveries on the basis of DDP, the seller must deliver the goods at his own cost and risk to a destination in the country of importation, must complete all the formalities involved and pay all import duties in addition to all costs. DDP is similar to DAP, but includes the payment of customs and taxes ahead of delivery.

DDP Incoterms: Who pays? The customer does not have to pay anything when receiving the shipment, as the goods are delivered duty free, like with a national delivery. The shipper is responsible for customs clearance, and this means that if import duties are incurred, these will be charged to the sender (customs and VAT).

In order to use DDP correctly, a few formalities are required, such as tax registration in the EU or, in the case of shipments to Switzerland, fiscal representation. Asendia Switzerland offers comprehensive carefree packages that you can use without any complications.

  • DDP is clearly ahead in customer satisfaction. Be sure to mention DDP in your terms of delivery. This way your customer can get comprehensive information before ordering and you increase your repurchase rate.

 

The Incoterms at a glance

DDP:

  • Consignments are no longer held at the border because of missing documents.
  • Shipments are delivered duty paid—your customer does not have to pay customs duties, VAT or customs fees. He gets his package delivered like a national consignment.
  • If you mention DDP delivery in your online shop, you can convince foreign shoppers to buy from you.
  • If you clearly state that the final price includes customs duties and VAT during the check-out process, your customers will finalise their orders much more often.
  • Depending on the shipping method, the recipient may not necessarily be at home when the parcel arrives (e.g. delivery without signature). This ensures greater customer satisfaction.

Using our Optimizer 4.0 tool, find out how much DDP customs clearance will cost you
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